International Trade

Question 1

international trade

Answer 1

exchange of goods and services between countries

Question 2

Benefits of International trade

Answer 2

consumers have access to more goods, producer decrease costs, increase competition, increase technologies and ideas

Question 3

comparative advantage

Answer 3

when a country can produce a good at a lower opportunity cost than another country

Question 4

Opportunity Cost

Answer 4

The value of the option not taken when a business makes a decision. Ex: company making apples and phone

Question 5

Opportunity Cost Example

Answer 5

US can produce 39a or 13 phones. The opportunity cost for apples = 13/39= .33 phones
Korea can produce 24a or 12 phones. The opportunity cost for apples= 12/24= .5 phones.
Therefore US should specialize in producing apples because their opportunity cost is lower

Question 6

Tariffs

Answer 6

Taxes imposed on imported goods. causes deadweight loss

Question 7

When should a country export goods

Answer 7

When the world price is higher than the domestic price

Question 8

When should a country import goods

Answer 8

when the domestic price is higher than the world price

Question 9

How are gains from trade represented on the graph?

Answer 9

For exports below world price and above supply and demand curves
For imports below demand and supply curve and above world price.